Small Businesses Crushed by Amazon Advertising

In the early days of advertising on Amazon it was a no-brainer small-medium sized businesses as ads on the e-commerce site were a fraction of where they are now. Companies like Plugable now spend $1.60 per click on Amazon today and for small businesses these costs can be over $100,000 a year on Amazon advertising alone. Many of Amazon’s users don’t understand the status of Amazon as a digital advertiser, where they dominate the space on a tier with Meta and Google. Over half a million small businesses feel the need to advertise on Amazon but they are having trouble keeping up with the costs. Amazon’s bid system makes it more difficult to compete in particular areas, and average retailers spend 4.6% of their costs on Amazon advertising which is over 3.5% points higher than just 5 years ago. Finally, businesses feel they have little pricing freedom on the platform, although Amazon says their users have full control of pricing and are not punished.